Colombia’s Ecopetrol Overhauls Board With Government-Backed Slate

A Government-Backed Board Takes Shape

Ecopetrol shareholders voted Monday to overhaul the company’s board of directors. Six of nine seats went to candidates nominated by President Abelardo De la Espriella’s administration.

The vote happened at an extraordinary assembly called specifically to reshape the board. It is one of the clearest moves yet by the new government to reassert control over state companies.

The Colombian state holds roughly 88.5% of Ecopetrol’s shares. That stake gives the Finance Ministry decisive weight whenever the company’s ownership structure is put to a vote.

Finance Ministry secretary general Carlos Alberto Castellanos represented the Nation’s shares at the assembly. His vote effectively determined the outcome before other shareholders weighed in.

Who’s In, Who’s Out

Three directors kept their seats: board chairman Luis Felipe Henao Cardona, Ricardo Rodríguez Yee and employee representative César Eduardo Loza Arenas. Henao represents minority shareholders on the board.

Six newcomers joined them: Carlos Augusto Suárez Rojas, Jorge Alberto Jaller Jaramillo and José Camilo Manzur Jattin. Also joining were Ludmila del Carmen Vergara Rosales, Betzy Patricia Martínez Zapateiro and Claudia Margarita Lafaurie Taboada.

Jaller previously worked as an executive at retail group Grupo Éxito. Vergara is a former Colombian transport superintendent, while Manzur leads the energy-distribution association Asocodis.

Martínez and Lafaurie both bring legal backgrounds to the table. Suárez has worked as a communications strategist for the current government.

Three directors left the board outright: Carolina Arias Hurtado, Hildebrando Vélez Galeano and Alberto José Merlano Alcocer. Two other seats had already emptied in July, when Ángela María Robledo and Tatiana Roa Avendaño resigned.

A Strikingly Small Quorum

Only 72 shareholders attended Monday’s extraordinary assembly in person or by proxy. That is a fraction of the more than 2,000 who showed up for the company’s ordinary assembly in March.

The gap reflects how routine these overhaul votes can be when one shareholder controls the outcome. With the state holding a supermajority, minority investors have limited ability to change the result.

Union leader Martín Ravelo said workers hope the new board will protect Ecopetrol’s traditional oil business. He said employees want management focused on strengthening reserves and production, not just optics.

The Backdrop: A President Pushed Out

The board vote landed one day after a separate shake-up at the top of the company. Acting president Juan Carlos Hurtado resigned Sunday evening under pressure from Ecopetrol’s own board.

His departure followed a leaked 43-minute recording published by newspaper El Tiempo. Chief financial officer Alfonso Camilo Barco stepped in as interim president the same day the new board was seated.

That timing means Ecopetrol enters a critical stretch with new directors and an interim chief executive simultaneously. Analysts say that combination raises the stakes for the board’s first substantive decisions.

Financing the ISA Empire

Part of what any new board inherits is Ecopetrol’s complicated ISA history. The company bought a 51.4% stake in the power-transmission giant from Colombia’s Finance Ministry back in August 2021.

That roughly US$3.7 billion purchase was initially financed through a bank loan. Ecopetrol then turned to international bond markets to help refinance that debt.

In October 2021, it issued US$2 billion in bonds split across two tranches. One tranche of US$1.25 billion matures in 2031; a second US$750 million tranche runs until 2051.

Ecopetrol returned to the market again in January 2023 with another US$2 billion bond. Proceeds that time went specifically toward prepaying the balance of the original 2021 ISA loan.

That 2023 issue, due in 2033, carried a 9% coupon and was oversubscribed roughly three times over. Around 320 investors worldwide took part, a sign of continued market appetite for Ecopetrol debt.

ISA Stays, For Now

ISA has since become a recurring political football under the new government. Some officials have floated selling the stake to Bogotá utility group Grupo Energía Bogotá for close to US$4.5 billion.

Interim president Barco rejected that idea just weeks before his promotion. He said earlier this month that Ecopetrol was “not in the middle of any process to divest” the stake.

He argued ISA provides financial stability and steady cash flow that complements Ecopetrol’s strategy through 2040. Whether the newly reshuffled board agrees remains an open question.

Ecopetrol’s finances are also under separate strain. Credit agency S&P cut the company’s rating to BB- this year, following a similar downgrade of Colombia’s sovereign rating.

What the New Board Faces

The reshaped board must now confirm whether Barco stays on permanently or hands off to another executive. It must also decide how aggressively to pursue new investment amid tighter credit conditions.

Analysts will be watching whether the government-nominated majority pushes to expand oil and gas output. Union leaders have made clear that is their preference over further diversification into power transmission.

The ISA question, in particular, is unlikely to disappear quietly. With Ecopetrol’s board now firmly aligned with the presidency, any decision on the asset will carry the government’s fingerprints.

For a company that supplies roughly a fifth of Colombia’s fiscal revenue in good years, that alignment matters well beyond the boardroom. Investors, workers and the treasury all have a stake in what comes next.

A separate S&P review this year found Ecopetrol had spent nearly 9 trillion pesos (US$2.9 billion) more than planned. That overrun adds pressure on the incoming board to tighten spending discipline quickly.

How the new directors balance those competing demands, oil growth, ISA’s future and investor confidence, will shape Ecopetrol’s next several years. The first full board meeting is expected within weeks.

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